How has COVID-19 pandemic caused rural and urban unemployment? write an essay of 250-300 words.
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Answers
Answer:
Early estimates of jobs data indicate that the coronavirus effect may have left a devastating impact on the economy, sending urban unemployment rate soaring to 30.9% . Overall unemployment rose to 23.4%.
The figures, based on the Centre for Monitoring Indian Economy’s weekly tracker survey, have held steady for two weeks now. The latest data for the week ended 5 April was released on Monday evening. CMIE’s estimates on unemployment shot up from 8.4% in mid-March to the current 23%.Based on a rough calculation, about 50 million people might have lost jobs in just two weeks of the lockdown, said Pronab Sen, a former chief statistician of India.
“Since some may have just been sent home for now, the actual scope of unemployment may be even higher and may show up a little later," he added.India does not have reliable, official high-frequency data on jobs. While CMIE’s jobs data has been the centre of a political slugfest in the past, with government officials repeatedly questioning the survey’s methodology, Sen said that it doesn’t matter now because what we are interested in is “capturing change".
“This (the unemployment number) is also somewhat expected," said Himanshu, associate professor of economics at the Jawaharlal Nehru University, Delhi.
Rampant job losses have gripped many other economies, too, in the face of the pandemic. Roughly 10 million US workers filed unemployment claims in the past fortnight, for instance.What happens after the lockdown is removed is more important," said Himanshu, adding: “My hunch is, even then, unemployment will remain high."
Nearly one-third of the workforce is also made of casual workers, who may not have much of a safety net if the economic flux continues. Since those without incomes will begin to consume less and less, it may leave a more lasting effect on the economy if left unaddressed, Himanshu said. “There might be second and third-order impacts (on firms and governments). The government needs to step in and help the economy bounce back after the lockdown. People need income," he added.
The CMIE’s jobs survey is based on a panel, which essentially means observations are derived by following a sample of people (a panel) over time at a regular frequency. The latest weekly survey had about 9,000 observations (or participants). Since two weekly surveys seem to have indicated roughly the same level of unemployment (about 23%), the numbers are reliable, said Mahesh Vyas, managing director and chief executive of CMIE. “It’s a huge spike. We didn’t expect it to be this high," he said.
Explanation:
With Covid precipitating a mass exodus of workers from cities to the hinterland, the rural employment guarantee scheme MGNREGA has been facing an unprecedented challenge, trying to accommodate the swelling ranks of rural unemployed in the limited number of rural public works. A BusinessLine report notes that as the number of rural households registered under MGNREGA shot up by 70 per cent year-on-year in June, it turned away one in five households unable to assign any work. This is despite the scheme having already expended over 75 per cent of its available funds and allocated 44 per cent of its budgeted work for the whole year in the first three months of this fiscal. This demand-supply mismatch will likely worsen in the coming months, with the South-West monsoon interrupting public works. This is unlikely to remain a seasonal issue either, with many returning migrants indicating they may stay put in their hometowns. Agricultural activity in India has always been characterised by small farmers eking out a subsistence living with meagre incomes. Should resettling migrants from urban areas lead to an overcrowding of job seekers in agriculture, this can precipitate a collapse in rural wages and consumption. There’s therefore an urgent need to address the rural unemployment problem, before it snowballs into a wider socio-economic crisis.
A few courses of action suggest themselves. For one, despite the NDA regime’s obvious discomfort with the scheme, the MGNREGA has proved to be a reliable vehicle to deliver a timely rural safety net. The budgetary allocations to this scheme therefore need to be urgently augmented. If the worry is about leakages, safeguards such as using Aadhaar-linked Jan Dhan accounts for cash transfers and geo-tagging MGNREGA-funded public works should suffice. Two, it needs to be kept in mind that MGNREGA can only provide subsistence-level income to rural workers. For them to do better, concerted efforts will need to be made to skill them suitably for more sustainable employment opportunities in services or manufacturing.